Creating A Repayment Plan For Your Home Loan

Managing the repayment of a home loan can be challenging, but with careful planning and strategic decision-making, you can navigate this financial journey successfully. By creating a repayment plan for your home loan, you can avoid the stress of defaulting on your loan. In this article, we will provide you with a few tips for an effective home loan repayment schedule and help you make informed decisions about repaying your housing loan.

1. Prepare an investment plan before getting the home loan

Before applying for a home loan, it's essential to assess your financial situation thoroughly. Start by preparing a worksheet that outlines your monthly income and expenses. This will give you a clear picture of your financial capabilities and help determine how much EMI you can afford.

For instance, let's say your monthly income is ₹50,000, and after deducting all expenses, you are left with ₹30,000. You can allocate ₹20,000 towards your monthly budget and use the remaining ₹10,000 as EMI for your loan. 

Additionally, consider investing the surplus funds into mutual funds or other high-return investments. It's crucial to calculate home loan repayments accurately to ensure they fit comfortably within your budget.

2. Choose a home loan that offers affordable housing loan interest rates

Finding a home loan with attractive housing loan interest rates is crucial to ensure manageable EMIs. Interest rates may vary from lender to lender, so it's essential to explore different options and compare rates. 

To simplify this process, most banks and financial institutions offer an online home EMI calculator. These calculators help you calculate house loan repayments and determine the most feasible EMIs based on your budget.

3. Look for flexi hybrid home loans

Flexi hybrid home loans offer a unique home loan repayment structure that can be beneficial in managing your EMIs effectively. During the initial tenure of the loan, you only need to pay the interest component as EMIs. This low-interest period allows you to calculate home loan repayments and allocate funds accordingly.

Once the initial tenor is completed, the EMIs increase slightly as you start paying both the housing loan interest and principal components of the loan. This flexibility ensures that the home loan is repaid without any setbacks or defaults.

4. Make prepayments to reduce EMI burden

Another simple yet effective strategy to pay off your home loan faster is by making regular prepayments whenever possible. A prepayment refers to settling an EMI before its official due date.

5. Opt for a home loan balance transfer at competitive interest rates

If you find that the interest rate on your existing home loan is becoming burdensome, you can explore the option of a home loan balance transfer. This involves moving your loan to another lender who offers lower housing loan interest rates. Most lenders provide competitive rates for balance transfers, which can help reduce your EMIs.

For example, suppose you have a home loan with an existing lender at an interest rate of 10%. By transferring the balance to another lender offering an interest rate of 8.5%, you can save significantly on your monthly EMIs. It's crucial to calculate house loan repayments accurately before deciding on a balance transfer to ensure it's financially beneficial in the long run.

6. Choose the right lender

When availing a home loan, choosing the right lender who offers favourable terms and conditions is crucial. Look for lenders that provide pre-approved loans at competitive rates and flexible home loan repayment options. Ensure that you thoroughly read and understand the terms and conditions before finalising any loan agreement.

Conclusion

Creating a home loan repayment plan is essential in managing your finances effectively and avoiding defaulting on payments. By using a home EMI calculator, you can accurately calculate house loan repayments and EMIs and make informed decisions about your repayment strategy. Consider various factors such as interest rates, flexible repayment options, and the possibility of making prepayments to pay off your loan faster. 

If you are looking for a home loan, Mahindra Finance is here to help. We offer competitive interest rates, flexible repayment options, and personalised customer service to meet your financial needs.

FAQs

1) What is a home loan repayment schedule?

A home loan repayment schedule provides a detailed breakdown of your loan repayment plan. It includes information on monthly EMIs, interest paid, principal repaid, and the outstanding balance at each stage of the loan.

2) How can I calculate my home loan EMI using an online home EMI calculator?

To calculate your home loan EMI using an online home EMI calculator, input details such as the principal amount, tenure, and interest rate into the calculator. This tool is essential for anyone looking to accurately calculate home loan repayments before committing to a loan.

3) Can I pay home loan faster than the agreed tenure?

Yes, you can pay off your home loan faster than the agreed tenure by making regular prepayments towards the principal amount.

4) Can I change my EMI amount after availing a home loan?

Yes, in certain cases, lenders may allow you to change your EMI amount.